RETAIL INDUSTRY

Bright prospects
OVERVIEW RETAIL INDUSTRY 2020

Revenue of retail sales of consumer goods and 2020 – VIETNAM POSTED NEGATIVE RETAIL GROWTH FOR THE
services in Vietnam by month FIRST TIME
Trillion dong Source: GSO, PHFM collect
500 15.0%
10.0%  COVID-19 pandemic negatively impacted the retail industry due to (1) A
400 5.0%
0.0%
decrease in spending on non-essential products; (2) The number of
300 -5.0% visitors to the store decreased; (3) Non-essential stores have been
-10.0%
200
-15.0% forced to close during the lockdown; and (4) Disruption to the global
100 -20.0% supply chain.
-25.0%
- -30.0%
 Retail sales recorded negative growth in March 2020 as the Covid-19
pandemic began to spread among the community. After that, the
Revenue of retail sales of consumer goods and services Y-o-Y enforcement of a social distancing brought a 26% decrease for retail
sales sector in April.
Consumption growth
Source: GSO, PHFM collect
 However, the sector regained a positive growth from May onwards with
the help of robust consumer spending when Covid-19 pandemic was
Others better controlled in Vietnam.

Travel service  In 2020, the total retail revenue of consumer goods and services
reached VND 5,059.8 trillion (+2.6% YoY). In which, retail sales of
Accommodation and food services
goods recorded VND 3,996 trillion (+6.8% YoY) because people
prioritized spending more than essential products, especially health-
promoting foods.
Goods

-40.0% -30.0% -20.0% -10.0% 0.0% 10.0%

OVERVIEW RETAIL INDUSTRY 2020

Survey of consumer behavior during Covid-19 pandemic

Source: Nielsen, PHFM collect NEW CONSUMER TRENDS IN COVID-19
80% PANDEMIC:
70%
60%
 Behavior and consumption structure change:
50%
40%
(1) Limited in public places, frequency of
30% shopping at supermarkets/commercial centers
20% decreased but shopping cart size increased, (2)
10% Customers shift from shopping at traditional
0%
markets to E-commerce to limit infection, (3)
Supermarket Wet market Grocery Online
Increased spending on essential food/health care
Number of people limited Number of people increased
products, reducing budget for electronics (except
Number of people have no change behavior
for laptops due to the need of online learning and
% Change of Value in consumption Traffic by brand 2020Q1 remote working).
Source: Kantar, PHFM collect Source: YouNet, PHFM collect
 E-commerce channels benefit from increased
14,000 300%
Number of orders/purchase
12,000 250%
online shopping demand: According to Nielsen
occasion
10,000 200% report, the number of people using online
8,000 150% shopping channel increased by 25%. The big
Spending/ purchase occasion 6,000 100% names in E-commerce sector such as Tiki,
4,000 50%
SpeedL, and Saigon Co.op all had positive growth
2,000 0%
- -50%
during the Covid-19 pandemic. A typical example
FMCG spending
is Tiki with 4,000 orders/minute. SpeedL also saw
0% 5% 10% 15%
an increase of 100-200% in orders.
2020 2019 Traffic 2020Q1 %QoQ

3
DRIVING FORCES FOR GROWTH OF RETAIL INDUSTRY IN 2021

 VIETNAM GDP growth could rank second in
the region: IMF forecasts Vietnam will be the
second fastest growing economy in ASEAN with
GDP growth of 6.5% in 2021, higher than the
global average of 6% and thereafter recover to
7.2% in 2021
 Recover of Household spending from Covid-19
pandemic has been well controlled: According to
Fitch Solutions, Vietnam's household spending
growth rate in 2021 is forecasted to be 7% year-on-
year, an increase of 0.8% percentage points
compared to last year.

GDP growth forecast 2021 Household spending growth rate

Source: IMF, PHFM collect Source: Fintch solution, PHFM collect

10.00% 12.00%

10.00%

8.00%

6.00%
0.00%
Vietnam Indonesia ThaiLand Philippines Malaysia
4.00%

2.00%

0.00%
-10.00%

2020 2021F 2022F

4
DRIVING FORCES FOR GROWTH OF RETAIL INDUSTRY IN 2021

 The retail industry has capability of adapting quickly to varied consumer habits, and diversified number of products of domestic
manufacturers.

 FMCG will be the main driver of retail sales growth in 2021.

Consumer look for “goods for healthy”, “Immune system Manufacturers and retailers change list of products/ distribution
support”, “Vitamin, supplement method to meet new demand of customers

Prefer to spend more for “good for

65% health” products.
Said that Health is their top
49% concern.

26% Will consider to buy Health

insurance after Covid-19 pandemic
PUSH
% Respondents who said they would eat home
more post-pandemic

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Vietnam Korean China HongKong 5
RETAIL INDUSTRY GROWTH FORECAST 2021

 Covid-19 pandemic has been complicated and Vietnam has not yet deployed the Covid-19 vaccine for the entire
population, which affects the purchasing power of consumers. Moreover, the income of a part of consumers that
have been reduced due to the Covid-19 pandemic has not been able to improve in the short term. Although Fitch
Solutions forecasts household spending to increase by 7%YoY, it is still down from pre-pandemic level.

 We estimate the growth rate of total retail sales of goods and services under the following two scenarios:
 Scenario 1: Vaccination Covid-19 for the whole population could be deployed in the third quarter 2021, the growth
rate of Vietnam's retail industry could reach 9.6%YoY.
 Scenario 2: Vaccination Covid-19 for the whole population could be implemented in the fourth quarter 2021, the
growth rate of Vietnam's retail industry could reach 8%YoY.

 Kantar forecasted the growth of Vietnam's retail industry from 9-10% in 2021.

Forecasting the growth rate of Vietnam's retail Forecasting Vietnam's economy in 2021 by Kantar
industry in 2021 Source: Kantar estimates, PHFM collect
Source: PHFM estimates
30.00%
14.0%
12.0% 25.00%

10.0%
20.00%
8.0%
15.00%
6.0%
4.0% 10.00%
2.0%
5.00%
0.0%
Q1/2021 Q2/2021F Q3/2021F Q4/2021F Full year 2020
0.00%
Vaccination Covid-19 for nationwide from the 3rd quarter of 2021 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F
Vaccination Covid-19 for nationwide from the 4th quarter of 2021 GDP growth Retail growth CPI
6
RETAIL INDUSTRY OUTLOOK IN LONG-TERM PERIOD

M&A trends in the retail industry

 Large enterprises in the retail industry raise market share through M&A deals
 Vietnam's retail industry is attractive to foreign investors

~3,000 million
USD
Vincommerce merged
with MSN

880 million 1,050 million

USD USD Vincommerce
Central Group acquired acquired Fivimart
Berli Jucker acquired BigC from Casino GroupC
Metro Group
113 million USD
MWG acquired Tran
Anh phone chain
Central Group acquired
Nguyen Kim

7
2014 2016 2018 2019 2020
RETAIL INDUSTRY OUTLOOK IN LONG-TERM PERIOD

Vietnam retail market is one of five the most potential retail markets in Asia and the global
 Boston Consulting Group (USA) forecasts that growth of MAC  The urbanization rate is still low, but there is still room for growth: secondary
(middle and affluent class) group in Vietnam could reach 11.4%/year cities will become the main growth driver for retail businesses instead of
which is the highest growth in the Southeast Asian area. existing big cities.
Rate of urbanization
MAC growth of Southeast Asian Source: Statista, PHFM collect
Source: Boston, PHFM collect
2030 44.45%
12.0% 2025 40.91%
10.0% 2020 39.3%
8.0% 2019 36.6%

6.0% 2018
2017
4.0%
2016
2.0%

0.0% 2016 2017 2018 2019 2020 2025 2030

Myanmar VietNam Philipins ThaiLand Indonesia
Population structure in Vietnam
Source: GSO, PHFM collect

 Vietnam has a large population (>97 million people) and a young 6% 25%

population structure with 60% of the population aged 18-50.

69%

<15 ages 15- 64 ages >64 ages 8

RETAIL INDUSTRY OUTLOOK IN LONG-TERM PERIOD

Modern trade channel has great potential for growth

 Although the GT (General Trade) channel accounts for 74% of the industry, its growth rate is only 1%, while the MT (Mordern Trade)
channel accounts for 26% of the market share but is growing two digits at 11.8%/year.

 The modern retail channel will "overtake" the traditional retail channel in the future. Specifically, the proportion of retail sales of goods
by modern types of distribution (shopping centers, supermarkets ...) could reach at 50% in 2025 and 60% in 2030.

 The growth rate of convenience stores and mini supermarkets in the period of 2017-2021 is the highest in Southeast Asia of about
37.4%.
Market share of MT channel CAGR of convenience stores and mini Market share of retail channel
Source: Ministry of Industry and Trade, PHFM collect Source: Kantar, PHFM collect
supermarkets (2017 - 2021) 120.0%
Source: IGD, PHFM collect
2030F
40.00% 100.0%

2025F 80.0%
30.00%

2020F 60.0% 8.9% 8.8% 8.8%

20.00%
2017 40.0%
10.00% 54.0% 52.9% 52.7%
20.0%
2015
0.00%
0% 20% 40% 60% 80% 100% 120% 0.0%
2019 2020 After social spacing
General Trade Mordern Trade Stress stores Wet market Specialized stores
Cash & Carry Mini supermarket Online
Others

9
RETAIL INDUSTRY OUTLOOK IN LONG-TERM PERIOD

E-commerce maintains dynamic expansion in the long term

Internet and social network penetration (%)
Source: E-commerce White Book, PHFM collect

50
CAGR of electronic market 2018 55
64
could reach 43% in 2015-2025.
41
2017 46
50.05

29
2016 35
64 million internet users, 47.3

penetration rate ~ 66%. 22.9

2015 26.25
E-commerce 42.57

Using social on mobile phone user Social network user Internet user

58 million social networks Southeast Asia electronics market size

Source: E-commerce White Book, PHFM collect
users on mobile devices,
Billion USD
penetration rate ~ 60%. 16
14
12
10
61.73 million people accessing 8
the internet on mobile devices. 6
4
2
0
Malaysia Philippines Singapore ThaiLand Vietnam
2015 2018 2025F

10
ENTERPRISES IN RETAIL INDUSTRY

909 TGDD stores, mainly trading in ICT products. MWG is

experimenting with two new products: watches and bicycles

1,553 Dien May Xanh stores, mainly trading in electronics

MWG and refrigeration. The green electronics chain is the growth
driver of MWG in the short term. The Company is promoting
Supermini Dien May Xanh model in the provinces.

1,767 Bach Hoa Xanh (BHX) stores, mainly trading in food

and household goods. BHX store chain is the growth driver of
MWG in the long term.

FRT 601 FPT Shop stores, mainly trading in ICT products,

contributed 83% of total FRT revenue.

222 Long Chau pharmacies, mainly trading in non-

prescription drugs and functional foods.

340 stores specializing in trading gold, silver, diamond and

gold jewelry.
PNJ The business segment of watches display the shop-in-shop
model.

DGW is the leader in exclusive wholesale distribution of

DGW ICT products
11
FINANCIAL INDICATOR OF TYPICAL BUSINESSES

2020 Performance 2021 Forecast Valuation

Revenue Net Profit Revenue Net Profit Price at
Code stock Fair price 21/05 Upside
P/E P/B
Value YoY Value YoY Value YoY Value YoY (VND/ share (VND/
(b.VND) (%) (b.VND) (%) (b.VND) (%) (b.VND) (%) share)
MWG 108,546 6% 3,920 2% 130,836 21% 6,019 54% 168,000 145,400 13.4 3.8 16% BUY
PNJ 17,511 3% 1,069 -10% 23,059 32% 1,538 44% 116,000 101,800 17.2 4.2 14% BUY
DGW 12,536 48% 263 63% 18,429 47% 448 70% 155,000 133,600 14.9 4.3 16% BUY
FRT 14,661 -12% 10 -95% 16,845 14% 113 303% 37,700 25,800 26.4 2.4 46% BUY
PET 13,453 34% 127 -9% 14,000 13% 280 36% N/A 20,150 12 0.9 N/A N/A
PSD 8,237 44% 46 0% 9,000 7% 96 109% N/A 15,800 9 1.3 N/A N/A
PSH 6,112 -33% 122 335% 10,151 66% 162 33% N/A 25,800 162 1.8 N/A N/A
VPG 2,331 1% 55 -37% 3,000 28% 150 172% N/A 38,000 14 2.1 N/A N/A
COM 2,899 -31% 51 37% 2,900 0% 35 -31% N/A 40,150 16.6 1.3 N/A N/A
ABS 1,108 40% 33 -35% 1,200 8% 60 81% N/A 31,000 30 3.5 N/A N/A

TOTAL 187,915 6% 5,765 -1% 229,420 22% 8,901 54% 16.4 3.5

Ratings definition

 Buy = Expected to outperform the local market by >10%

 Hold = Expected to in line with the local market by +10%~ -10%
 Sell = Expected to underperform the local market by >10%.
 Not Rated = The stock is not rated in Phu Hung’s coverage universe or
not listed yet.
12
VALUATION

4.4

4.3 DGW

FRT
4.2 PNJ

4.1

P/B
4

3.9

3.8 MWG

3.7
0 5 10 15 20 25 30 35

P/E
13
MOBILE WORLD JOINT STOCK COMPANY – MWG
Fair price: 168,000 VND/share
Company profile
 Mobile World Investment Corporation (HSX: MWG) is the leading retailer in Price movement compare with Index
Vietnam, accounting for over 50% and 40% of the retail market for phones
and electronics, with more than 3,000 stores nationwide. 80%
Key Catalyst 60%
 Increasing market share of Dien May Xanh (DMX) chain: (1) Continuing to
convert some TGDD stores to DMX stores; (2) Opening a new Supermini DMX 40%
stores; (3) Research to expand the electronics chain in the Indonesian market. 20%
 Double-digit revenue growth of BHX thanks to “5 billion” BHX model and
0%
online BHX development. Also, BHX strives to improve its gross profit margin to
cover depreciation and general expenses. -20%
 Maintaining stable revenue and increasing market share of TGDD chain -40%
thanks to (1) Strengthening new services such as installment payment, money 21/05 21/08 21/11 21/02 21/05
transfer, collection,.. (2) Increasing the proportion of corporate products (private
label, OEM, products monopoly) up to 30% to gradually reduce dependence on MWG VN-Index

firms; (3) Testing the sales model through more than 30,000 retail agents; (4)
Take advantage of the yard space of each store to sell bicycles. Historical valuation

Financial ratio 2017A 2018A 2019A 2020A 2021F P/E

Net revenue (bn VND) 66,340 86,516 102,174 108,546 130,836 20.0
Profit after tax (bn VND) 2,207 2,880 3,836 3,920 6,019 15.0
EPS (VND) 7,162 6,689 8,657 8,654 12,654 10.0
EPS Growth (%) -30% -7% 29% 0% 46% 5.0
Book value (VND/per share) 19,187 20,872 27,416 34,197 43,999 0.0
P/E 21/05 21/08 21/11 21/02 21/05
18.3 13.0 13.17 13.74 13.35
P/B 6.8 4.2 4.2 3.5 3.8 P/E
Cash dividend (%) 15% 15% 15% 15% 15%
14
PHU NHUAN JEWELRY JOINT STOCK COMPANY – PNJ
Fair price: 116,000 VND/share
Company profile
 Phu Nhuan Jewelry Joint Stock Company (HSX: PNJ) is the No. 1 jewelry Price movement compare with Index
retailer in Vietnam. The core products of PNJ include gold jewelry, silver
jewelry, diamonds, gold bars, and watches. The production capacity of 80%
PNJ is 8 times higher than its competitors.
60%
Key Catalyst
 Style by PNJ brand – PNJ's new story in 2021: The company's 40%
management said that there was a store that achieved break-even in the 20%
first month of launching the new brand.
0%
 Ambition to become a wholesale supplier of Italian goods: PNJ
improves production capacity by opening a second workshop in Long Hau, -20%
creating many new products that require higher processing and -40%
manufacturing techniques, replacing the share of imported products. 21/05 21/08 21/11 21/02 21/05
 Inventory optimization: The company continues to maintain this strategy
PNJ VN-Index
in 2021 thanks to the ERP system, thereby designing and displaying
products according to the needs of each customer in each region.
Historical valuation
Financial ratio 2017A 2018A 2019A 2020A 2021F
Net revenue (bn VND) 10,977 14,571 17,000 17,511 23,059 P/E
30.0
Profit after tax (bn VND) 726 952 1,191 1,069 1,538
EPS (VND) 6,443 6,429 5,286 4,698 6,762 20.0
EPS Growth (%) 47% 0% -18% -11% 44% 10.0
Book value (VND/per share)
26,181 25,285 20,305 23,026 27,589 0.0
P/E 21.3 14.5 16.27 17.24 17.17 21/05 21/08 21/11 21/02 21/05

P/B P/E
5.2 3.7 4.2 3.52 4.21
Cash dividend (%) 10% 10% 8% 20% 20%
15
DIGIWORLD CORPORATION– DGW

Fair price: 155,000 VND/share

Company profile
 Digiworld was a leading Distributor and provider of Market Expansion Price movement compare with Index
Services in Vietnam, mainly in the field of Technology (ICT). In which,
market share of laptop and mobile phone distribution ~ 24% and ~8% 500%
respectively. 400%
Key Catalyst 300%
 The mobile phone segment reaps impressive business results from 200%
Xiaomi and Apple
 Sustained double-digit growth in Laptops & Tablets by distributing more 100%
premium products. 0%
 The healthcare segment is expected to see double-digit growth in 2021 -100%
driven by musculoskeletal medicine distribution. 21/05 21/08 21/11 21/02 21/05
 New product development – home appliances (TV, air conditioner,
DGW VN-Index
refrigerator, washing machine, ..). This industry is expected to generate
revenue of more than 1,000 billion VND in 2021.
Financial ratio 2017A 2018A 2019A 2020A 2021F Historical valuation
Net revenue (bn VND) 3,821 5,937 8,488 12,536 18,429 P/E
Profit after tax (bn VND) 30.0
79 109 162 263 448
EPS (VND) 1,982 2,735 3,961 6,213 10,410 20.0

EPS Growth (%) 17% 38% 45% 57% 68% 10.0

Book value (VND/per share) 17,138 18,975 22,372 26,913 36,323 0.0
21/05 21/08 21/11 21/02 21/05
P/E 10.61 8.37 5.9 13.79 14.89
P/E
P/B 1.23 1.21 1.04 3.2 4.3
Cash dividend (%) 5% 20% 10% 20% 20% 16
FPT DIGITAL RETAIL JOINT STOCK COMPANY - FRT

Fair price: 37,700 VND/share

Company profile
 FPT Retail (FRT) is the second largest retailer in the mobile phone retail Price movement compare with Index
industry in Vietnam (18% market share), after MWG. FRT owns two retail
chains, FPT Shop and F.Studio - mainly dealing in ICT products, while 60%
F.Sutdio only deals in Apple products. A new business segment of FRT 50%
since Q1/2018 is the pharmacy chain Long Chau. 40%
Key Catalyst 30%
20%
 The ICT segment is expected to grow in the next few years thanks to (1) 10%
Trend of premiumization of users; (2) Benefit from Decree 98/2020 creating 0%
greater opportunities for official distribution agents; and (3) The -10%
Government's 5G Development and Digital Transformation Project. -20%
 Accelerating the plan to expand Long Chau pharmacy chain: The -30%
21/05 21/08 21/11 21/02 21/05
management is still committed to continuing to expand the pharmaceutical
chain and the number of stores could reach more than 200 stores by the FRT VN-Index
end of 2020 and 500 stores in 2021.
Financial ratio 2017A 2018A 2019A 2020A 2021F
Historical valuation
Net revenue (bn VND)
13,147 15,298 16,634 14,661 16,845 P/B
Profit after tax (bn VND) 2.5
290 348 204 10 113
2.0
EPS (VND) 1.5
7,030 4,961 2,500 129 1,426
1.0
EPS Growth (%) -30% -29% -50% -95% 308%
0.5
Book value (VND/per share) 0.0
19,315 16,531 15,688 15,575 15,852
21/05 21/08 21/11 21/02 21/05
P/E
- 11.9 8.08 168 26.47 P/B

P/B
- 3.6 1.3 1.4 2.38 17
Cash dividend (%) 10% 10% 8% 8% 10%
Analyst certification
The report was prepared by Ton Nu Nhat Minh – Analyst – Phu Hung Fund Management Joint Stock Company. Each research analyst(s), strategist(s) or research associate(s)
responsible for the preparation and content of all or any identified portion of this research report hereby certifies that, with respect to each issuer or security or any identified portion of
the report with respect to each issuer or security that the research analyst, strategist or research associate covers in this research report, all of the views expressed by that research
analyst, strategist or research associate in this research report accurately reflect their personal views about those issuer(s) or securities. Each research analyst(s), strategist(s) or
research associate(s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that
research analyst, strategist or research associate in this research report.

Disclaimer
Phu Hung Fund Management Joint Stock Company/Phu Hung Securities Corporation do not hold ourselves responsible for completeness or accuracy of the report. It is not an offer to
sell or solicitation of an offer to buy any securities. Phu Hung Securities/ Phu Hung Fund Management and its affiliates, officers, employees may or may not have a position in or with
respect to the securities mentioned herein. Phu Hung Securities/Phu Hung Fund Management (or one of its affiliates) may from time to time perform investment banking or other
services or solicit investment banking or other business for any company mentioned in this report. All opinions and estimates included in this report constitute are based on the
assessments of Phu Hung Fund Management as of this date and are subject to change without notice.